The latest quarterly survey from the CBI and PricewaterhouseCoopers found that activity in the financial services sector increased by 4 per cent in the three months to December, with 32% of businesses' volumes increasing during the final quarter of 2009.
The latest quarterly survey from the CBI and PricewaterhouseCoopers found that activity in the financial services sector increased by 4 per cent in the three months to December, with 32% of businesses' volumes increasing during the final quarter of 2009.
These figures are disappointing as industry consensus expectations had been set at 16%.
Ian McCafferty, chief economic adviser at the CBI, said: "The bounce in UK financial services activity over the past six months is not expected to last as we enter 2010.
"Firms see their business volumes falling back again, with no further improvement in profitability over the next three months."
Somewhat depressingly, 79% of businesses believe the UK is now less competitive as a financial centre, whilst just over 50% believe there is a low probability of further deterioration in financial markets..
Unemployment in the financial services sector fell by 3 per cent, with the total jobs lost since the crisis began estimated at 60,000 - employment is expected to be broadly flat over the next three months.
Last month the CBI said that the chancellor made a serious error in imposing an extra tax on jobs at a time when economic recovery is fragile, commenting on the further increase in employers' National Insurance Contributions (NICs) announced in the pre-Budget report.
John Hitchins, UK banking leader at PwC is not optimistic about the short-term outlook believing that sustained growth is not expected. He said: "Activity and revenues are expected to decline over the coming quarter, predictions for demand remain weak, and an uncertain regulatory future continues to temper the banks growing confidence with caution."
Investment managers however are slightly more optimistic. Pars Purewal, UK asset management leader at PwC, said: "Interest rates are at half a per cent and consumers are not earning anything on deposit accounts. That leads people to the stock market, and, by definition, investment managers get that money."
Life insurers are slightly confident that things will improve in 2010 with nearly 90 per cent expecting to spend on marketing this year. In the last quarter they saw an increase in new business values for the first time in more than two years, but saw a reduction in profitability.
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